Oct. 29, 2013 – A Wisconsin village with tribal parcels held in trust by the U.S. government cannot assess municipal taxes against the Indian tribe, a federal appeals court has ruled, and the village cannot make the United States pay either.

The Village of Hobart is a small rural town located within the boundaries of the Oneida Nation Indian Reservation near Green Bay. Some parcels within the village are considered tribal lands, but non-tribal land is subject to state and local jurisdiction.

“So one may wonder how it is that non-Indians own land in Hobart even though the village is entirely within the boundaries of the Oneida reservation,” wrote Judge Richard Posner for the U.S. Court of Appeals for the Seventh Circuit.

“The answer is that over time and through a variety of statutory provisions a great deal of Indian land has been acquired by non-Indians,” Posner noted.

For instance, Congress “allotted” some reservation lands in the late 1800s and early 1900s, Posner explained, to liberate families from “tribal ownership that Congress in that era considered socialistic, to encourage their assimilation into mainstream American life, and not incidentally to facilitate the transfer of Indian land to non-Indians.”

Today, nearly 6.6 percent of the village’s total land is held in trust for the Oneida tribe, and 148 parcels are considered “Indian” parcels under tribal jurisdiction. This suggests that the other 93.4 percent of Hobart was “allotted” to non-Indians at some point.

In 2007, the village passed an ordinance assessing “fees” against all village parcels, including tribal parcels, to pay for a storm water management system. The Oneida Nation pursued a declaration that such assessments against tribal lands are prohibited.

In the alternative, the village argued that the U.S. government, which holds the tribal land in trust, should pay the assessments in place of Oneida Nation.

The panel determined that Hobart’s “fee” is really a “tax,” designed to generate revenue for a government project, and “federal law forbids state and local authorities to tax Indian lands.”

The panel also rejected Hobart’s argument that the federal Clean Water Act gives the village, through the state, control of storm water runoff on tribal lands.

“So far as federal regulation of water pollution is concerned, tribes equal states – they are not subservient to them,” Judge Posner explained.

The panel suggested an “exception of necessity” could allow municipalities to manage storm water on tribal lands, just as firefighters could be required to extinguish fires on Indian lands. “But the Village doesn’t argue for such an exception,” Posner noted.

Finally, the appeals panel rejected the claim that the U.S. should pay the taxes. “The government’s status as trustee rather than merely donor of tribal lands is designed to preserve tribal sovereignty, not to make the federal government pay tribal debts,” wrote Judge Posner, noting there were no debts to pay.